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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: The Phoenix who wrote (46626)	1/10/2001 3:59:46 PM
From: Kenneth E. Phillipps	Respond to of 77400

Chambers: Cisco's Ready to Brawl As clouds loom over the economy and service provider market, Cisco Systems Inc.'s (Nasdaq: CSCO - message board) CEO John Chambers tried to paint a sunny picture in an important public speech today. Chambers, speaking at an investment conference, said Cisco stands to gain more market share during tough times than during boom times (see Chambers of Hope ). He sees Cisco’s product balance, its geographic balance, and its relationship with its large enterprise customer base as the keys to its ongoing stability. But it wasn't all cheery chatter. Chambers was at times fiesty, vowing that Cisco would compete more aggressively in the product performance of its high-end routers, where Juniper Networks Inc. (Nasdaq: JNPR - message board) and Avici Systems Inc. (Nasdaq: AVCI - message board; Frankfurt: BVC7) are currently besting it (see AT&T Deal Boosts Avici ). “We have got to compete on feeds and speeds,” Chambers says. “You will see us be more direct with regard to understanding and challenging our competitors’ claims. Some of the claims aren’t nearly as effective as some people would anticipate them to be.” “Juniper’s a very good company and they’re fun to compete against,” Chambers said a bit later. He added, though, that Cisco would be more aggressive about comparing Juniper’s marketing claims to results. “We’re going to be the clear leaders in high end routing,” he says. Chambers also wondered why other network equipment companies — such as Lucent Technologies Inc. (NYSE: LU - message board) and Nortel Networks Corp. (NYSE/Toronto: NT - message board) — aren't making headway in the high end routing space. In optical networking, Chambers said he would be “very disappointed” if Cisco didn’t hit his goal of $3 billion to $7 billion in revenue by the end of 2001. As an indicator of its optical success, Chambers told investors to watch deals in which Cisco sells end-to-end optical portfolios. However, he added an important caveat: “You want to watch which ones we win that are profitable,” he says. “We are not going into situations where there are too low a margins with too high a risk.” Similarly, Chambers reiterated that although Cisco’s vendor financing deals have been conservative when compared to its competitors, it would be even more conservative in that area in the coming months, focusing on profitability. As acquisitions go, Chambers maintained that even with a lower stock price, Cisco is still on track to acquire 20 or more firms this year. Also, Chambers dismissed claims that a slowing economy would cause staffing concerns for Cisco. On the contrary, he says, economic transitions make it easier to retain staff and make acquisitions. He also noted that, as a rapidly growing company, Cisco is bound to have a set amount of turnover within its management ranks. “I will either lose or change 10 percent of my leadership team every year. We anticipate that coming its just a natural phenomena,” he says. Chambers told investors to expect Wall Street earnings estimates on Cisco to vary more widely than before (see CIBC Downgrades Cisco, Juniper ). “If we can say what the capital spending will be and what the economy will do in the short term, than we can predict the quarters very accurately,” he explained. “Lately, though, our visibility has been a bit tougher and therefore I would expect a wider range of estimates.” In all, though, Chambers wooed the crowd with his candor and sunny disposition. “Will Cisco be affected by a slowdown in carrier spending? Absolutely. We are not immune, but we won’t be as affected as certain segments of the IT community,” he says. Apparently, however, the speech was not sunny enough to reassure Cisco's nervous investors. Cisco's stock rose briefly leading up to Chambers' speech; but fell back afterwards. In late afternoon trading, Cisco was down 2.69 (-7.24%) to 34.44. -- Phil Harvey, senior editor, Light Reading lightreading.com lightreading.com